More new council houses 'would save taxpayers money'

Authorities across London would be financially better off building new council houses than continually footing the bill for private rental accommodation for homeless people.

The claim comes from the New Local Government Network think tank. It says that if 9,500 new council houses were built in London, councils would save local taxpayers £56m.

It says the cost of paying for families to live in accommodation is so high that in parts of London it would be cheaper to build than to keep paying for them to live in private rental accommodation and bed and breakfasts.

The think tank has called for the Government – which is capping housing benefit payments to more housing benefit tenants in private rental accommodation next month –  to examine the possibility of new house building.

Critics say that the new caps to Local Housing Allowance will displace people out of London, as they will no longer be able to afford private rents, and landlords will not lower them.

Simon Parker, director of the New Local Government Network, said: “We recognise the need to contain housing benefit costs, but the idea of building new homes represents a win-win solution for the Government, councils and families. Our analysis suggests that ten boroughs might be able to save money while providing more properties.

“Our figures provide a robust overview of the opportunity available. It is now for central government to work with the boroughs to understand how this proposal will pan out on the ground and to help access the support which councils need to make it happen.

“With a predicted shortfall of 750,000 homes in London by 2025, there has never been a more vital time to pursue this approach.”